USD falls after weak PPI data points to further Fed easing

The Swiss Franc rose against the USD after the State Secretariat for Economic Affairs (SECO) released the unemployment numbers for the month of September. The data showed that the listed number of unemployed people stood at 99k. This was 454 fewer than those reported in August this year. As a result, the unemployment rate remained at 2.1%. The number of unemployed people declined by 7,488 in the same period last year. The Swiss economy, which depends a lot on the global economy has been hurt by the continuing trade war. The Swiss Franc, which is often viewed as a safe haven currency has also been weakening against the USD.

The euro rose against the USD even after the EU released mixed economic data. In Germany, data showed that industrial production rose by 0.3% after contracting by -0.4% in the previous month. In France, exports increased to EUR 42.8 billion in August while exports increased to EUR 47.8 billion. In Sweden, industrial production declined slightly to 3.7% from the previous 3.8%. Industrial new orders declined by a smaller rate of -1.1%. This was smaller than the previous month’s decline of -2.8%. The European Union has been going through a manufacturing recession, which has spread to other sectors of the economy. Things could get worse as a trade war between the EU and the US starts.

The US dollar declined slightly after the US released the producer price data. In September, the PPI rose by 1.4%, which was lower than the consensus estimates of 1.8%. It was also lower than the 1.8% increase in August. On a MoM basis, the PPI declined by -0.3%, which was lower than the previous gain of 0.1%. The core PPI declined to 2.0% from the previous 2.3%. On a MoM basis, the PPI declined by -0.3%, which was lower than the previous increase of 0.3%. 

USD/CHF

The USD/CHF pair declined below a key support today. The pair has been on a downward momentum since Friday after it reached an important resistance level of 1.0025. On the four-hour chart below, the pair is trading below the 14-day and 28-day moving averages. The RSI has been on a downward trend after reaching a high of 73 last week. The pair seems to be headed to the 61.8% Fibonacci Retracement level of 0.9885.

GBP/USD

The GBP/USD pair declined after the chances of a no-deal Brexit increased. This is after a phone call between Boris Johnson and Angela Merkel ended in deadlock. This happened after Merkel insisted that Northern Ireland must remain in the European Union’s customs union. The pair declined to a low of 1.2225. This was the lowest level since October 2. On the hourly chart, this price is along the lower line of the Bollinger Bands while the RSI moved to below the oversold level. The moving average of the oscillator has moved lower as well. The pair will likely retest the previous low of 1.2200.

EUR/USD

The EUR/USD pair rose to a high of 1.0996 after the mixed economic data from Europe. The pair is in a continuation of an upward trend that has been forming since October 1. The pair’s price is along the upper line of the Bollinger Bands while the RSI has been moving higher. The average true range, which is an indicator of volatility has been declining. The pair will likely continue moving higher to test the important support of 1.1000.